Beyond Meat, Inc. (NASDAQ: BYND) (“Beyond Meat” or “the Company”)
provided a business update today.
Beyond Meat Reduces Expenses to Drive Towards Cash Flow
Positive Operations
Beyond Meat is making a strategic shift in pursuit of a more
sustainable growth model that emphasizes the achievement of cash
flow positive operations.
President and CEO Ethan Brown commented, “Beyond Meat is
implementing measures to drive more sustainable growth, emphasizing
the achievement of cash flow positive operations within the second
half of 2023. While we believe the current headwinds facing our
business and category—including record inflation—are transient, our
mission, brand, and long-term opportunity endure. To manage through
the current environment and realize the opportunity ahead, we are
significantly reducing expenses and sharpening our focus on a set
of key growth priorities.”
Brown added, “We continue to make strong progress against the
levers of mainstream adoption—taste, health, and price–and are
steadfastly advancing key strategic partnerships. The global
climate crisis underway dictates greater, not less, urgency in the
adoption of all solutions of which ours is among the most immediate
and powerful. We believe our decision to reduce personnel and
expenses throughout the Company, including our leadership group,
reflects an appropriate right-sizing of our organization given
current economic conditions. We remain confident in our ability to
deliver on the long-term growth and impact expected from our global
brand.”
Reduction in Force
The Company is reducing its current workforce by approximately
200 employees, representing approximately 19% of the Company's
total global workforce.
The Company currently estimates that it will incur one-time cash
charges of approximately $4 million in connection with the
reduction in force, primarily consisting of notice period and
severance payments, employee benefits, and related costs. The
Company expects that the majority of these charges will be incurred
in the fourth quarter of 2022, and that the reduction in force will
be substantially complete by the end of 2022, subject to local law
and consultation requirements, which may extend the process beyond
the end of 2022 in certain countries. The charges the Company
expects to incur are subject to assumptions, including local law
requirements, and actual charges may differ from the estimate
disclosed above.
Revision to 2022 Full Year Revenue Outlook
The Company is also reducing its full year revenue outlook.
Based upon preliminary results, the Company now expects third
quarter 2022 net revenues of approximately $82 million, a decrease
of approximately 23% versus the prior-year period. Full year 2022
net revenues are expected to be in the range of approximately $400
million to $425 million, representing a decrease of approximately
14% to 9% compared to the full year 2021. This compares to the
Company’s previous expectation of full year 2022 net revenues in
the range of $470 million to $520 million.
While the Company continues to review the drivers behind recent
performance, the Company believes it has been negatively impacted
by ongoing softness in the plant-based meat category overall,
especially in the refrigerated subsegment, and by the impact of
increased competition. Inflation is believed to be an underlying
factor exerting pressure on the category as consumers trade down
into cheaper forms of protein, including animal meat. Additionally,
the Company believes it was negatively impacted by decisions made
by distributors and customers, such as changes in inventory levels
and postponed or canceled promotions. Delayed and/or canceled
product promotions, programs and introductions relative to the
Company’s plans also negatively impacted management’s revenue
outlook. The Company expects gross margin to be negatively impacted
as a result of the reduced revenue outlook.
Preliminary results remain subject to the completion of normal
quarter-end accounting procedures and adjustments and therefore are
subject to change.
Third Quarter Financial Results and Earnings Conference
Call on November 9, 2022
Full third quarter results will be discussed during the upcoming
Beyond Meat earnings conference call, scheduled for Wednesday,
November 9, 2022 after market close at 5:00 p.m. ET. Investors
interested in participating in the live call can dial 412-902-4255
or listen to a simultaneous, live webcast available on the
Investors section of the Company’s website at www.beyondmeat.com.
The webcast will also be archived.
Estimated Operating Expense Savings
In aggregate, over the next twelve months, the reduction in
force, combined with the elimination of certain open positions and
changes to the executive leadership team, including as described in
our Form 8-K filed with the Securities and Exchange Commission
(“SEC”) today, is expected to result in approximately $27 million
in cash operating expense savings, and an additional approximately
$12 million in non-cash savings related to previously granted,
unvested stock-based compensation which would have vested over the
next twelve months. In addition, as a result of these actions, the
Company expects to recognize approximately $3 million of one-time
non-cash savings related to the reversal of previously expensed,
unvested stock-based compensation in the third and fourth quarters
of 2022.
About Beyond Meat
Beyond Meat, Inc. (NASDAQ: BYND) is a leading plant-based meat
company offering a portfolio of revolutionary plant-based meats
made from simple ingredients without GMOs, no added hormones or
antibiotics, and 0 mg of cholesterol per serving. Founded in 2009,
Beyond Meat products are designed to have the same taste and
texture as animal-based meat while being better for people and the
planet. Beyond Meat’s brand commitment, Eat What You Love®,
represents a strong belief that there is a better way to feed our
future and that the positive choices we all make, no matter how
small, can have a great impact on our personal health and the
health of our planet. By shifting from animal-based meat to
plant-based protein, we can positively impact four growing global
issues: human health, climate change, constraints on natural
resources and animal welfare. As of July 2022, Beyond Meat branded
products were available at approximately 183,000 retail and
foodservice outlets in over 90 countries worldwide. Visit
www.BeyondMeat.com and follow @BeyondMeat, #BeyondBurger and
#GoBeyond on Facebook, Instagram, Twitter and TikTok.
Forward-Looking Statements
Certain statements in this release constitute “forward-looking
statements" within the meaning of the federal securities laws,
including statements related to the Company’s expectations with
respect to its third quarter and full year 2022 revenue outlook,
cost-reduction initiatives, expected charges and savings related to
its workforce reduction and executive leadership changes, and the
timing and success of achieving its cash flow positive targets. The
charges associated with the reduction in force and executive
leadership changes may be greater than anticipated, completion of
the reduction in force may take longer than anticipated, the
Company may be unable to realize the contemplated benefits in
connection with the workforce reduction, executive leadership
changes and other potential cost-reduction initiatives, and the
workforce reduction, executive leadership changes and
cost-reduction initiatives may have an adverse impact on the
Company’s performance. Additionally, the Company’s ability to meet
its cash flow positive targets is subject to a number of
assumptions and uncertainties, including, without limitation, the
Company’s ability to reduce costs and achieve positive gross
margins; the Company’s ability to meet certain revenue and
operating expense targets, which may be subject to factors beyond
the Company’s control; and the Company’s ability to monetize
inventory and manage working capital.
Forward-looking statements are based on management's current
opinions, expectations, beliefs, plans, objectives, assumptions and
projections regarding financial performance, prospects, future
events and future results, including ongoing uncertainty related to
the COVID-19 pandemic, including the ultimate duration, magnitude
and effects of the pandemic and, in particular, the impact to the
foodservice channel, operations and supply chains, growth trends,
our international expansion plans, market share, new and existing
customers and expense trends, among other matters, and involve
known and unknown risks that are difficult to predict. In some
cases, you can identify forward-looking statements by the use of
words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,”
“anticipate,” “believe,” “estimate,” “project,” “predict,”
“outlook,” “potential,” “continue,” “likely,” “will,” “would” and
variations of these terms and similar expressions, or the negative
of these terms or similar expressions. These forward-looking
statements are only predictions, not historical fact, and involve
certain risks and uncertainties, as well as assumptions.
Forward-looking statements should not be read as a guarantee of
future performance or results, and will not necessarily be accurate
indications of the times at, or by which or whether, such
performance or results will be achieved. Actual results, levels of
activity, performance, achievements and events could differ
materially from those stated, anticipated or implied by such
forward-looking statements. While Beyond Meat believes that its
assumptions are reasonable, it is very difficult to predict the
impact of known factors and, in particular, the COVID-19 pandemic,
and, of course, it is impossible to anticipate all factors that
could affect actual results. There are many risks and uncertainties
that could cause actual results to differ materially from
forward-looking statements made herein including, but not limited
to, the effects of global outbreaks of pandemics or contagious
diseases or fear of such outbreaks (such as COVID-19), including on
our business, financial condition, cash flows and results of
operations, including on our supply chain, the demand for our
products, our product and channel mix, labor needs at the Company
as well as in the supply chain and at customers, the timing and
level of retail purchasing, the timing and level of foodservice
purchasing, our manufacturing and co-manufacturing facilities and
operations, our inventory levels, our ability to expand and produce
in new geographic markets or the timing of such expansion efforts,
the pace and success of new product introductions, the timing of
new foodservice launches, and on overall economic conditions and
consumer confidence and spending levels; the impact of uncertainty
in our domestic and international supply chain, including labor
shortages and disruption and shipping delays and disruption; a
resurgence of COVID-19 and the impact of variants of the virus that
causes COVID-19 which could slow, halt or reverse the reopening
process, or result in the reinstatement of social distancing
measures, business closures, restrictions on operations,
quarantines, lockdowns and travel bans; the impact of uncertainty
as a result of doing business in China and Europe; government or
employer mandates requiring certain behaviors from employees due to
COVID-19, including COVID-19 vaccine mandates, which could result
in employee attrition at the Company, suppliers and customers as
well as difficulty securing future labor and supply needs; the
impact of adverse and uncertain economic and political conditions
in the U.S. and international markets; the volatility of capital
markets and other macroeconomic factors, including due to
geopolitical tensions or the outbreak of hostilities or war; our
ability to effectively manage our growth in the U.S. and abroad;
our ability to streamline operations and improve cost efficiencies,
which could result in the contraction of our business and the
implementation of significant cost cutting measures; our ability to
identify and execute cost-down initiatives intended to achieve
price parity with animal protein; the success of operations
conducted by joint ventures, such as the Planet Partnership, LLC
with PepsiCo, Inc., where we share ownership and management of a
company with one or more parties who may not have the same goals,
strategies or priorities as we do and where we do not receive all
of the financial benefit; the effects of increased competition from
our market competitors and new market entrants; changes in the
retail landscape, including the timing and level of trade and
promotion discounts, our ability to grow market share and increase
household penetration, repeat purchases, buying rates (amount spent
per buyer) and purchase frequency, and our ability to maintain and
increase sales velocity of our products; changes in the foodservice
landscape, including the timing and level of marketing and other
financial incentives to assist in the promotion of our products,
our ability to grow market share and attract and retain new
foodservice customers or retain existing foodservice customers, and
our ability to introduce and sustain offering of our products on
menus; the timing and success of distribution expansion and new
product introductions in increasing revenues and market share; the
timing and success of strategic partnership launches and limited
time offerings resulting in permanent menu items; our estimates of
the size of market opportunities and ability to accurately forecast
market growth; our ability to effectively expand or optimize our
manufacturing and production capacity, including effectively
managing capacity for specific products with shifts in demand;
risks associated with underutilization of capacity which could give
rise to termination fees to exit certain supply chain arrangements
and/or the write-off of certain equipment; our ability to sell our
inventory in a timely manner requiring us to sell our products
through liquidation channels at lower prices, write-down or write
off obsolete inventory, or increase inventory reserves; our ability
to accurately forecast our future results of operations, including
fluctuations in demand for our products and any increased
competition; our ability to accurately forecast demand for our
products and manage our inventory, including the impact of customer
orders ahead of holidays and shelf reset activities, and supply
chain and labor disruptions; our operational effectiveness and
ability to fulfill orders in full and on time; variations in
product selling prices and costs, and the mix of products sold; our
ability to successfully enter new geographic markets, manage our
international expansion and comply with any applicable laws and
regulations, including risks associated with doing business in
foreign countries, substantial investments in our manufacturing
operations in China and the Netherlands, and our ability to comply
with the U.S. Foreign Corrupt Practices Act or other
anti-corruption laws; the effects of global outbreaks of pandemics
or contagious diseases or fear of such outbreaks, such as COVID-19;
the success of our marketing initiatives and the ability to grow
brand awareness, maintain, protect and enhance our brand, attract
and retain new customers and grow our market share; our ability to
attract, maintain and effectively expand our relationships with key
strategic foodservice partners; our ability to attract and retain
our suppliers, distributors, co-manufacturers and customers; our
ability to procure sufficient high-quality raw materials at
competitive prices to manufacture our products, especially those
impacted by the conflict in the Ukraine or problems in the global
supply chain exacerbated by COVID-19 lockdowns in China; the
availability of pea and other protein that meets our standards; our
ability to diversify the protein sources used for our products; our
ability to differentiate and continuously create innovative
products, respond to competitive innovation and achieve
speed-to-market; our ability to successfully execute our strategic
initiatives; the volatility associated with ingredient, packaging,
transportation and other input costs; the impact of inflation and
rising interest rates across the economy, including higher food,
grocery, raw materials, transportation, energy, labor and fuel
costs; reduced consumer confidence and consumer spending, including
spending to purchase our products, and negative trends in consumer
purchasing patterns due to consumers’ disposable income, credit
availability, debt levels and inflation; real or perceived quality
or health issues with our products or other issues that adversely
affect our brand and reputation; our ability to accurately predict
consumer taste preferences, trends and demand and successfully
innovate, introduce and commercialize new products and improve
existing products, including in new geographic markets; significant
disruption in, or breach in security of our information technology
systems and resultant interruptions in service and any related
impact on our reputation, including related to data privacy; the
ability of our transportation providers to ship and deliver our
products in a timely and cost effective manner; management and key
personnel changes, the attraction and retention of qualified
employees and key personnel, and our ability to maintain our
company culture; the effects of organizational changes including a
reduction-in-force and realignment of reporting structures; risks
related to use of a professional employer organization to
administer human resources, payroll and employee benefits functions
for certain of our international employees or use of certain third
party service providers for the performance of several business
operations including payroll and human capital management services;
the effects of natural or man-made catastrophic or severe weather
events particularly involving our or any of our co-manufacturers’
manufacturing facilities or our suppliers’ facilities; the impact
of marketing campaigns aimed at generating negative publicity
regarding our products, brand and the plant-based industry
category; the effectiveness of our internal controls; accounting
estimates based on judgment and assumptions that may differ from
actual results; the requirements of being a public company and
effects of increased administration costs related to compliance and
reporting obligations; our significant indebtedness and ability to
pay such indebtedness; risks related to our debt, including
limitations on our cash flow from operations and our ability to
satisfy our obligations under the convertible senior notes; our
ability to raise the funds necessary to repurchase the convertible
senior notes for cash, under certain circumstances, or to pay any
cash amounts due upon conversion; provisions in the indenture
governing the convertible senior notes delaying or preventing an
otherwise beneficial takeover of us; any adverse impact on our
reported financial condition and results from the accounting
methods for the convertible senior notes; estimates of our
expenses, future revenues, capital expenditures, capital
requirements and our needs for additional financing; our ability to
meet our obligations under our campus innovation and headquarters
lease, the timing of occupancy and completion of the build-out of
our space, cost overruns, delays and the impact of COVID-19 on our
space demands; our ability to meet our obligations under leases for
our corporate offices, manufacturing facilities and warehouses;
changes in laws and government regulation affecting our business,
including the U.S. Food and Drug Administration and the U.S.
Federal Trade Commission governmental regulation, and state, local
and foreign regulation; new or pending legislation, or changes in
laws, regulations or policies of governmental agencies or
regulators, both in the U.S. and abroad, affecting plant-based
meat, the labeling or naming of our products, or our brand name or
logo; the failure of acquisitions and other investments to be
efficiently integrated and produce the results we anticipate; risks
inherent in investment in real estate; the financial condition of,
and our relationships with our suppliers, co-manufacturers,
distributors, retailers and foodservice customers, and their future
decisions regarding their relationships with us; our ability and
the ability of our suppliers and co-manufacturers to comply with
food safety, environmental or other laws and regulations;
seasonality, including increased levels of purchasing by customers
ahead of holidays, customer shelf reset activity and the timing of
product restocking by our retail customers; the sufficiency of our
cash and cash equivalents to meet our liquidity needs and service
our indebtedness and our ability to access capital markets upon
favorable terms, including due to rising interest rates; economic
conditions and the impact on consumer spending; the impact of
increased scrutiny from stakeholders, institutional investors and
governmental bodies on environmental, social and governance (“ESG”)
practices, including expanding mandatory and voluntary reporting,
diligence and disclosure on ESG matters; the outcomes of legal or
administrative proceedings, or new legal or administrative
proceedings filed against us; our, our suppliers’ and our
co-manufacturers’ ability to protect our proprietary technology,
intellectual property and trade secrets adequately; the impact of
tariffs and trade wars; the impact of changes in tax laws; foreign
exchange rate fluctuations; and the risks discussed under the
heading “Risk Factors” in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2021 filed with the SEC on March 2,
2022, the Company’s Quarterly Report on Form 10-Q for the fiscal
quarter ended July 2, 2022 filed with the SEC on August 11, 2022,
and the Company’s Quarterly Report on Form 10-Q for the fiscal
quarter ended October 1, 2022 to be filed with the SEC, as well as
other factors described from time to time in the Company's filings
with the SEC. All forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their
entirety by the cautionary statements set forth above. Such
forward-looking statements are made only as of the date of this
release. Beyond Meat undertakes no obligation to publicly update or
revise any forward-looking statement because of new information,
future events, changes in assumptions or otherwise, except to the
extent required by applicable laws. If we do update one or more
forward-looking statements, no inference should be made that we
will make additional updates with respect to those or other
forward-looking statements.
Contacts
Media:
Shira Zackai
shira.zackai@beyondmeat.com
Investors:
Fitzhugh Taylor and Raphael Gross
beyondmeat@icrinc.com
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